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Calculating ROI for server, desktop and application virtualization

Are you properly calculating ROI for your virtualization projects? Learn how to calculate the cost savings of your server, application or desktop virtualization implementation.

Virtualization has been touted as IT's lifesaver for the past few years. This is true, in many ways. There are so many layers of virtualization that organizations can implement -- including server, storage, desktop, application, presentation and user state virtualization -- all of which change the metrics for IT departments.

But organizations should not implement virtualization for the sake of virtualization. Like all projects in IT, staying focused on obtaining a sufficient return on investment (ROI) is a key element in virtualization projects. Calculating ROI for virtualization, both the hard and soft cost savings, can help you successfully execute your strategy.

First, focus on short-term needs when planning your virtualization strategy. If your server room is crammed full of physical machines and you're thinking of moving or expanding your data center, then server virtualization is the first place to start. If you have problematic applications in your desktop network, then perhaps you should start with application virtualization and resolve these problems once and for all.

Start with a simple and structured approach -- build on your successes and virtualize one step at a time.

Begin with server virtualization. Most organizations have problems with their data centers and physical server utilization ratios, so it often makes sense to start here. Server virtualization will resolve many data center issues and increase server utilization to 60% or 70%. It will also help you plan out the foundation required to implement virtualization in other layers, such as virtual desktop infrastructure (VDI) or storage virtualization, since both have a tendency to grow out of the infrastructure necessary for server virtualization.

Lay out a foundation for application virtualization. The advantage of using application virtualization is that you don't have to deploy it for every application in your network at once. You can focus on the most difficult applications first, and then slowly work to encompass all applications.

Address other layers of virtualization as needed. For example, user state virtualization is nothing more than a matter of applying technologies you already have in your network. If you're using Microsoft Active Directory Domain Services, it relies on Group Policy to implement Folder Redirection and user account management to deploy roaming profiles. Implementing these technologies will both protect user information by storing it in centralized repositories, and lay the groundwork for the implementation of VDI.

How to calculate ROI

As a rule, you'll want to perform a project postmortem, calculating ROI after implementing each layer of virtualization. Server virtualization can bring you some considerable hard-dollar savings from the start, especially if you can obtain some rebates from your utility provider or local government.

Potential and real cost savings from server virtualization
Potential savings
  Power savings  $300 to $600 per virtualized server.
 Cooling savings  Up to $400 per virtualized server.
 Hardware savings  From $2,500 or more per virtualized
 server, depending on physical server
 License savings (Microsoft
 Windows Server)
  75% of Enterprise license per virtualized
 License savings (open source)  Nothing, except for support costs.
 Power rebates (selected utility
 Up to 50% of the total cost of the project .
 Government rebates (federal,
 provincial and state)
 Variable reduction rates (income tax
 reductions, sales tax rebates
 and more).
 Space savings  More than 90% space reduction
 (based on an average of 10 virtual
 machines per physical host).

For some of the virtualization technologies, it can be difficult to quantify some of the soft-dollar savings. Keep the following questions in mind when calculating ROI:

  • How much do you value the time you save in preparing a virtual vs. a physical server? A virtual server can be prepared in minutes once the infrastructure and process are in place, compared with weeks for a physical server.
  • How much do you value the automation of standard testing and development environment preparation? With virtualization, you can implement technologies that allow your testers and developers to both deploy and manage their own test environments.
  • How much do you value the flexibility a virtual infrastructure can provide for changing business needs? With the ability to deploy new applications -- both server and desktop -- in days rather than weeks, you'll be able to respond quickly and effectively to changing business needs.
  • How much do you value the reduced time to deploy new operating systems such as Windows 7? With application virtualization, you may never have to repackage an existing application again. This is especially true when you change operating systems, because the application virtualization engine allows the application to work on almost any version of Windows. This is one of the most significant savings you'll see when implementing virtualization.

There is no doubt: Virtualization provides solid ROI. But properly calculating ROI can prove you are getting the most out of it.

Danielle and Nelson Ruest are IT experts focused on virtualization, continuous service availability and infrastructure optimization. They have written multiple books, including Virtualization: A Beginner's Guide for McGraw-Hill Osborne, and MCTS Self-Paced Training Kit (Exam 70-652): Configuring Windows Server Virtualization with Hyper-V for Microsoft Press. Contact them at [email protected] or [email protected].

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